CASE NO. 03-54200
VS.  ADV. NO. 04-5458



Western Security Bank (the "Bank") is before the court on the Plaintiff's Motion for Summary Judgment that it filed on July 15, 2004. Having considered the motion, the affidavit and other papers submitted in support thereof, and the letter submitted by Joseph A. Quatrocky (the "Debtor"), and after hearing the arguments of counsel for the Bank and affording the Debtor an opportunity to be heard, the court will grant the motion.

Factual and Procedural Background

On December 9, 2003 the Debtor filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code, commencing the above-styled case. On April 9, 2004, after receiving an extension of the deadline for doing so, the Bank filed a Complaint to Determine Dischargeability of Indebtedness, commencing this adversary proceeding. The complaint alleges that, on October 5, 2001, the Debtor borrowed $122,100 from the Bank in the name of Prestige Motors, LLC, which was the Debtor's used car business in Scottsdale, Arizona. The purpose of the loan, which the Debtor personally guaranteed, was to purchase a Ferrari automobile (the "Collateral"). The Debtor represented that he was purchasing the Collateral for immediate resale, so the Bank agreed to the Debtor's request not to have its lien noted on the certificate of title. The Debtor has acknowledged that he never intended to resell the Collateral, but always intended to retain it for his own personal use. The Debtor had the Collateral titled in his individual name.

In March 2002 the Debtor closed Prestige Motors and moved to Kentucky. The Debtor renewed the loan nine times over the period April 2002 through October 2003, each time reiterating his representation that the loan was for business purposes. In addition, as part of the first renewal, the Debtor signed a security agreement with respect to the Collateral, representing that it was located in Arizona even though it had been moved to Kentucky just a month before.

In January 2003 the Debtor sold the Collateral without informing the Bank. The Bank asserts that it reasonably relied on the Debtor's false representations in making and renewing the loan and forbearing from having its lien noted on the title to the Collateral, rendering the debt nondischargeable under 523(a)(2) and (4) of the Bankruptcy Code. The Bank claims that the Debtor's sale of the Collateral makes the debt one for willful or malicious injury excepted from discharge by 523(a)(6) of the Code. The Bank alleges that it has suffered damages in the amount of $108,000 plus interest, attorney's fees, expenses, and costs.

On May 13, 2004 the Debtor filed a pro se answer, which indicated that the Debtor's address was 538 Chinoe, Lexington KY 40502. On May 24, 2004 the Bank served on the Debtor a request for admissions, asking the Debtor to admit matters mirroring the numbered allegations of the complaint. The Bank enclosed a copy of Rule 7036 of the Federal Rules of Bankruptcy Procedure and Rule 36 of the Federal Rules of Civil Procedure to make the Debtor aware of the requirements of the rules and the consequences of failing to comply with those requirements. The request and the copy of the rules were mailed to the Debtor at the Lexington address set forth in his answer filed only 11 days before, which is the same address as the one appearing on the petition commencing the Debtor's Chapter 7 case. The Debtor never responded to the request for admissions.

On July 15, 2004 the Bank filed the motion presently before the court, which was accompanied by excerpts from the transcript of the Debtor's Rule 2004 examination and an affidavit of a Bank representative. Copies of the motion and supporting papers were mailed to the Debtor at the Lexington address set forth in his answer and in his petition. On July 19, 2004 the court entered an Order scheduling a hearing on the motion for summary judgment for August 5, 2004. That Order also set August 3, 2004 as the deadline for filing and serving a written response to the motion with supporting documentation. The Debtor never filed a formal response.

Immediately prior to the time of the hearing on August 5, the court staff received a telephone call from the Debtor indicating that he was calling from Arizona and was sending something for the court to consider in connection with the motion for summary judgment by overnight delivery service. Later that day, the court received a letter from the Debtor, the letterhead showing a Mesa, Arizona address, which represented that the Debtor did not receive the motion for summary judgment until August 2, 2004, forwarded from his Lexington address. He also claimed not to have received anything else from the Bank's attorney or the court since the answer was filed. The letter requested a 90-day extension of the deadline for responding to the motion and that the adversary proceeding and/or Chapter 7 case be transferred to Phoenix. The Debtor did not, prior to this letter, notify the court of his address change, in connection with either the Chapter 7 case or the adversary proceeding.

Legal Discussion

Rule 36(a) of the Federal Rules of Civil Procedure, made applicable in bankruptcy adversary proceedings by Rule 7036 of the Federal Rules of Bankruptcy Procedure, provides that, when a request for admissions is served, "[e]ach matter of which an admission is requested . . . is admitted unless, within 30 days after service of the request, or within such shorter or longer time as the court may allow or as the parties may agree to in writing, subject to Rule 29, the party to whom the request is directed serves upon the party requesting the admission a written answer or objection addressed to the matter, signed by the party or by the party's attorney." The Debtor did not serve a written answer or objection within 30 days after the Bank's service on him of the request for admissions, and did not request an extension of that deadline. Parties representing themselves are held to the same standards as attorneys, e.g., Eglinton v. Loyer (In re G.A.D., Inc.), 340 F.3d 331, 335 (6th Cir. 2003) ("The Supreme Court . . . has 'never suggested procedural rules in ordinary civil litigation should be interpreted so as to excuse mistakes by those who proceed without counsel.'") (quoting McNeil v. United States, 508 U.S. 106, 113, 113 S. Ct. 1980(1993)), and, in any event, the Bank's attorney made the requirements of the rules clear by enclosing copies with the request. Accordingly, each matter set forth in the request for admissions is admitted.

Although there is some uncertainty regarding 523(a)(4), the admitted matters, the Rule 2004 examination transcript, and the Bank's affidavit establish the necessary elements under 523(a)(2) of the Bankruptcy Code, Rembert v. AT & T Universal Card Services, Inc. (In re Rembert), 141 F.3d 277, 280-81 (6th Cir. 1998), and under Code  523(a)(6), e.g., Kawaauhau v. Geiger, 523 U.S. 57, 118 S. Ct. 974 (1998); Markowitz v. Campbell (In re Markowitz), 190 F.3d 455, 464 (6th Cir. 1999). The Bank has also established the amount of its damages, except for the attorney's fees.


For the foregoing reasons, the court will enter a separate order sustaining the Plaintiff's Motion for Summary Judgment and denying the relief requested by the Debtor in his letter to the court dated August 4, 2004. That order will afford the Bank an opportunity to file an affidavit with respect to attorney's fees and expenses and will afford the Debtor an opportunity to file a written objection to the affidavit, whereupon the court will enter a judgment for $108,000 plus attorney's fees and expenses established by affidavit, interest, and costs, and determining that the indebtedness evidenced by the judgment is excepted from the Debtor's discharge.

Copies to:

Matthew B. Bunch, Esq.

Joseph A. Quatrocky (538 Chinoe, Lexington KY 40502)

Joseph A. Quatrocky (4700 East Main, Mesa AZ 85205)